SMM Evening Comments (Dec 2): Shanghai Nonferrous Metals Closed Mostly with Gains on Subsiding US Inflation

SHANGHAI, Dec 2 (SMM) – Shanghai nonferrous metals closed mostly with gains as the US inflation pressure showed signs of weakening based on the latest PCE price index, which recorded the smallest year-on-year increase since the end of last year.

Shanghai copper gained 0.94%, aluminium rose 0.57%, lead inched down 0.06%, zinc added 1.61%, tin advanced 0.31%, and nickel climbed 0.57%.

Copper: The most-traded SHFE 2301 copper closed up 0.94% or 620 yuan/mt at 66,240 yuan/mt, with open interest down 4,563 lots to 147,143 lots.

On the macro front, (1) US PCE price index recorded the smallest year-on-year increase since the end of last year, with inflationary pressures easing. (bullish ☆) (2) US November Markit Manufacturing PMI was finalised at 47.7, with a previous reading of 47.6 and a forecast of 47.6 (bearish ☆)

In the spot market, the export window was open for two straight days. The sources of domestic copper in the spot market were scarce as some smelters refrained from selling. The spot premiums were boosted by the lack of imported cargoes amid falling SHFE/LME price ratio recently.

Aluminium: The most-traded SHFE 2301 aluminium closed up 0.57% or 110 yuan/mt at 19,245 yuan/mt, with open interest up 5,172 lots to 226,853 lots.

On the supply side, the domestic operating capacity continued to increase slightly. On the demand side, orders in aluminium processing sectors were poor in the traditional off-season. Although relaxed pandemic controls boosted market sentiment, relatively poor fundamentals will prevent aluminium prices from rising. Thus, the short-term aluminium prices may move rangebound.

Lead: The most-traded SHFE 2301 lead closed down 0.06% or 10 yuan/mt at 15,745 yuan/mt, with open interest down 741 lots to 80,835 lots.

SHFE lead price was relatively strong this week. As long-distance shipments of lead ingot were hindered by the pandemic, the downstream mainly purchased nearby on rigid demand. The lead ingot social inventory fell slightly again, but the in-plant stocks held by the smelters rose. The delivery situation in the market is worth attention. SHFE lead is expected to remain high in the near future.

Zinc: The most-traded SHFE 2301 zinc closed up 1.61% or 390 yuan/mt at 24,680 yuan/mt, with open interest up 1,613 lots to 124,644 lots.

It is announced that Tianjin will resume the normal operation to the full extent, indicating easing pandemic control measures in China. SMM zinc ingot social inventory across the seven major markets in China totalled 51,100 mt, down 1,600 mt from a week ago. SHFE zinc rose today with support from the fundamentals and macro front.

Tin: The most-traded SHFE 2301 tin closed up 0.31% or 570 yuan/mt at 187,180 yuan/mt, with open interest down 2,884 lots to 50,050 lots.

In the spot market, the smelters retained the willingness to make quotes in early trade, and only a small number of them did not quite. The spot premiums offered by the traders were relatively low, and some have dropped to the negative zone. The overall shipments were poor, and downstream players mainly purchased on rigid demand.

Nickel: The most-traded SHFE 2301 nickel closed up 0.57% or 1,140 yuan/mt at 202,320 yuan/mt, with open interest up 682 lots to 79,014 lots.

In the spot market, Jinchuan nickel was in premiums of 7,500-8,000 yuan/mt, with an average of 7,750 yuan/mt, down 300 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 5,000-5,800 yuan/mt, with an average of 5,400 yuan/mt, down 400 yuan/mt from a day ago. SHFE nickel remained high boosted by the bullish macro front, though Indonesia announced to delay the taxation plan yesterday. For nickel briquette, the prices stood between 204,900-205,200 yuan/mt, up 500 yuan/mt from the previous trading day.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]